Film Finance Overwhelm (pt.2)

Stacey Parks returns with a guest post -- and a sequel.

Because Film Finance Overwhelm (Part 1) was such a popular post, I decided to do a Part 2. And because many of the comments and emails I got came in the form of questions, I decided to make the format of this post in Q+A form. I think seeing the answers to some of the most commonly asked questions will clear things up for many of you.

As a refresher, the 4 Film Financing components I talked about in Part 1 – the ones that are working in today’s market to independently finance films outside of the studio system are as follows:

1. Tax Incentives
2. Partnering With Production Companies
3. Pre-Sales
4. Crowd Funding

So let’s move on to Q+A…shall we?

Q: What are the benefits from both sides of partnering with a Production Company or more experienced Producer?

A: The obvious benefit to the new or less-experience Producer is pretty obvious – you get to leverage someone else’s track record to get your film made. But what about the benefit to the other Producer (the bigger one)? The benefit to them is that you are bringing them a killer concept and/or killer script that they didn’t have before. In my own pitching experience I find that every single one of the Producers I speak to says they are always looking for the next killer project – and they don’t really care where it comes from! Enter YOU. One of the keys to this approach is that hopefully you can bring more to the table than just a script, for example some kind of unique expertise. What areas of expertise do you have that you can contribute? Do you have existing relationships with foreign distributors for instance? How about marketing expertise? Are you a producer who can qualify for international co-production funds because you have a European or Australian or New Zealand passport? Think along those lines of some unique contribution you can bring to the partnership.

Q: What does it take to make a Pre-Sale when you don’t have the typical ‘package’?

A: It’s a fact that the majority of Pre-Sales these days are done on ‘packages’ – meaning a script with Director and Cast attachments. So what if you have an atypical package meaning not a name director or big international stars? Well I’ll tell you… I’ve seen this past year a few projects be successful at Pre-Sales by attaching the right Producer or Executive Producer. Yes, Producer and EP are also part of your package! Mind you these projects were also very commercial concepts, and not in the art-house/drama genre. Which brings up something else – sometimes, and I mean only sometimes, if your concept is so strong and commercial, you can mange a Pre-Sale or two ONLY based on that, even without having a big director or stars attached. In those cases what happens is who ever is buying from you, may insist on attaching an experienced ‘name’ themselves, so they can increase their level of trust and mitigate their risk.

Q: Aren’t the administrative costs extremely high when closing a tax finance deal?

A: Yes, actually they are. They can be anywhere from 15% to 25% of your budget by the time to take into account the discounting that banks do, legal, financing fees, interest, etc. For this reason, it usually only makes sense to take advantage of tax incentive deals when your budget is $2 million or more (and some say $5 million or more). Because tax deals can be expensive to administer many Producers prefer to finance with equity rather than tax incentives, but equity isn’t always available, and unless you are experienced with a track record, can be difficult to secure. Obviously the higher the budget of your film, the more tax incentives make sense for your production – for example when you start getting into the $5-$10 million budget range the numbers starting adding up even better. Having said that, I personally think it’s always worthwhile to look into the option of shooting in places that offer favorable tax incentives, and run the numbers to see how everything pencils out. I know Producers who have resisted this for a long time, and have finally given in because not taking advantage of 20%-40% in rebates is considered simply irresponsible at this point.

Q: What percentage of budget can you actually raise with Crowd Funding?

A: Certainly I’m seeing people raise 100% of their budgets doing crowd funding campaigns, especially with budgets of $200K and less. However in most cases, I think if you can raise 20%-25% of your budget with Crowd Funding then you can wrap a traditional financing structure around that. The thing to keep in mind with crowd funding is that you want to keep your campaign donation-based instead of investment-based, as anything investment-based can put you into legal grey area. Obviously sites like Kickstarter and IndieGoGo are terrific platforms for running your Crowd Funding campaigns and the thing that I like best about raising money through crowd funding is that it can be a great way to raise development funds in the beginning, when you need things like a website and other presentation materials to get the ball rolling. By contrast, I’ve also seen Producers use crowd funding very successfully to raise finishing funds, because by then you actually have sample footage to show people, and there can be an increased level of trust that your film will actually be completed.

Q: What are the downsides to raising International Co-Production financing as opposed to International Pre-Sale financing?

A: International Co-Production financing is second nature to most European producers because that’s their ‘traditional’ financing model. Nowadays however, even American producers are getting in on the action and the two biggest downsides I see with seeking International Co-Production financing are 1) The amount of red tape it takes to apply for government film funds, and 2) the amount of time it takes to get a project off the ground when you’re relying on international co-production funds. With so many new ways of financing your film these days, even European producers are looking outside their traditional model of ‘free government money’ because it’s simply just so much more efficient to cobble together the financing in other ways (using the 4 components I talked about above + private investors). And yes, most U.S tax rebate programs are much more efficient than the European government funds – quicker to get approval on and quicker to get cash-flowed.

So there you have it — I’d love to keep answering questions so please if you have any more, place them in the comments section below!

And if you want to delve deeper into Film Financing 101, check out the Virtual Intensive I’m putting on after Thanksgiving!

In the – Film Financing 2.0 Essential Training - I’ll be covering these 4 components of financing in-depth over the course of a few weeks. Take a look at the details of this small group program, and grab a seat before it sells out. Join the movement to get your film financed for 2011!

Why Can't Producers Get Along & Work Well Together?

Today's guest post is from NYC-based feature film producer Adam Brightman. Recently I was asked by a couple of smart but fairly inexperienced producers some good questions about how producing teams can work well together (and not so well).  For better or worse, in my career, which is now in its third decade (ouch), I have averaged about 70/30 good to bad.  Maybe that is par for the course.  Maybe it is reflective of how much of my film work has been on non-studio, extremely challenging films.  In any case, since they asked, and since it is a crucial and, perhaps, unappreciated part of the filmmaking process, here are my thoughts.

1.  Everybody counts.  All producers on films today are important, and unless they are clearly dead weight or baggage (a star's manager, an executive's friend, what have you) then every producer makes a valuable contribution.  And whatever the credit one gets on a movie, if you are part of the producing team then you are a producer.  Plain and simple.  So as I said, everybody counts, and the producing teams that recognize and acknowledge that fact work well.  The ones that feel a need, for whatever reason, to undermine and minimize each other's contributions do not work well.2.  Communication.  That's the business we're all in, yet some people are better at it then others.  I have worked with some producers who can barely articulate a thought, much less effectively communicate an agenda, a plan of action, an argument.  If you cannot communicate, you are in the wrong business.  If you have other skills that lend themselves to being a producer but have trouble communicating, then, in my opinion, you should let other people be the communicators and confine yourself to the role you are best suited for.  Which leads me to...

3.  Define the work.  Movies are complicated to make, and only get more complicated, which is really why we do in fact need bigger producing teams (that and the practical fact that there are very few people around anymore who are the great 'all around' producers of the past.  It really was simpler then.)  The producing teams that work best are ones where everyone understands their role and does what they do best.  This is not to say that a good team does not share and overlap duties.  The best teams feel free to advise each other, and support each other, but also trust each other to do what they do without being second-guessed.  Which leads me to the most important and admittedly cliche part of this little essay...

4.  Trust and Respect.  Easier said then done, sometimes, but a little bit of the latter goes a long way, and if you don't have the former, why are you on the team?  Of course, there are many answers to that question, since movies come together in so many ways and with so many combinations of people.  But if there is one thing I have seen over my many movies that really made the difference between a good team and a bad one, it would be trust, or lack of it.  Making movies is a frightening enterprise.  There is generally a lot at stake.  Money. Career.  Relationships.  Success!  Failure!  This pressure can bring out the worst in people.  But I say, if it is so hard, and so much is on the line, then all the MORE reason to depend on each other and work together to make it a success.

Adam Brightman has worked in film production since 1982. He has been a part of the producing team on many movies, including "Two Family House", "Funny Games", and "Nick and Norah's Infinite Playlist". He is currently producing the Amy Heckerling comedy "Vamps".

PGA's Producer Code Of Credits

The PGA announced that they are close to getting the Studios to adopt their Producers Code Of Credits as the determining factor in who gets credited as producer on a project. If you haven't read these requirements, you must -- whether you are a producer, filmmaker, financier, or crew person. Hell, you should if you are an audience member too.

PGA Approves Transmedia Producer Credit

This is PGA's wording for providing the credit: A transmedia narrative project or franchise must consist of three (or more) narrative storylines existing within the same fictional universe on any of the following platforms: film, television, short film, broadband, publishing, comics, animation, mobile, special venues, dvd/blu-ray/cd-rom, narrative commercial and marketing rollouts, and other technologies that may or may not currently exist. These narrative extensions are not the same as repurposing material from one platform to be cut or repurposed to different platforms.

A transmedia producer credit is given to the person(s) responsible for a significant portion of a project’s long-term planning, development, production, and/or maintenance of narrative continuity across multiple platforms, and creation of original storylines for new platforms. Transmedia producers also create and implement interactive endeavors to unite the audience of the property with the canonical narrative and this element should be considered as valid qualification for credit as long as they are related directly to the narrative presentation of a project.

Transmedia producers may originate with a project or be brought in at any time during the long-term rollout of a project in order to analyze, create or facilitate the life of that project and may be responsible for all or only part of the content of the project. Transmedia producers may also be hired by or partner with companies or entities, which develop software and other technologies and who wish to showcase these inventions with compelling, immersive, multi-platform content.

To qualify for this credit, a transmedia producer may or may not be publicly credited as part of a larger institution or company, but a titled employee of said institution must be able to confirm that the individual was an integral part of the production team for the project.

The Producer Credit: What It Means To Me

Producing is all I do and the only credit I get. The meaning and value of that credit erodes all the time as financiers and packagers and directors seek to share it. I do something very specific though that none of those other collaborators do. I am there from the very beginning until the very end doing my best to make sure that the best team assembled, best environment created, best film made, full potential realized, best release and marketing strategy conceived, and maximum revenue (within those other considerations) achieved. It is my role to make sure that all options are considered and the ramification of each choice considered in advance.

I contribute to the script but take no credit -- yet people comment how "my body of work" has common themes and threads. I help design the production, from the look, to the cast, to the crew, to the rhythm, to the tone, to the marketing -- yet people don't think my credit is a creative one (because it has been undervalued by all those that glom on to it). I strategize how to make the film go from an idea or concept into reality -- I make the film inevitable, with attachments, with financing, with distribution, with an audience, yet somehow the industry thinks producers are interchangeable. The industry encourages that I do a volume business so that they can "service" their clients, yet they give me no support, be it financial or just reinforcement (if a project is not ready or a collaborator not a financial asset, I am the one that must deliver the news -- and even if they agree with me, they take the side of the client).

Six years ago I was one of two key witnesses in the successful anti-trust suit against the MPAA and Studios' Screener Ban. One of the reasons we won was that the judge recognized that my livelihood was dependent not on singular films, but on the perception of my key creative role in a string of films that had a critical, commercial, and cultural impact (and how the added boost screeners gave my films was essential). Since that time, I have witnessed the devaluing of the producer credit as never before.

We are in incredibly tough times for "quality" projects. Fewer get released. Fewer get financed. The budgets come down, and with them come lower fees. It has never been this hard over the last twenty years. When I ask myself "how am I going to survive making the kind of films I do, the kind of films I love?" my one real hope is a deepening understanding of what I bring to a project. And to me that is a deepening understanding of what it is to produce. 

Producing for me is not contributing to the producing process -- it is doing the entire process. If someone needs to receive additional credit because of their contribution it should not just reflect their contribution, but it also should not diminish the contribution of others. It is my job to do a lot of other people's job, but it is not my place to take any credit for that.  When someone takes producer credit and is not there from beginning to the end, involved in all aspects of the development, funding, prep, production, post, marketing, and distribution, they diminish my work and the value of my credit.  When the producer credit is devalued, it becomes harder to get movies made and to respect the process by which good movies are made.  
I also firmly believe that the producer is in service to both the director and the film.  The producer and director are both there to make the best film within their means and circumstances, and hopefully they have a mutual understanding as to what that means.  I have been surprised by those out there who pitch themselves as "filmmaker friendly" but don't have faith in their team's vision.  Similarly, I am surprised by those who go looking for "collaborators" but truly don't want to engage in the discussion about how to make the best the film within the context of their project.  To produce means to be in a collaborative environment in service to a filmmaker's vision.
If we are now involved in a cultural war to protect ambitious film, then who is the enemy?

Hope For The Future pt. 9: The List #'s 35 -38

35. Film schools are waking up to the need to educate students on how to survive – it is not enough to know how to direct or produce, graduates must have real world skills too. Jon Reiss is developing a specific curriculum on this, and I have heard from others who are looking to do the same.

36. Filmmakers are recognizing that film festivals are more of a launch platform than a marketplace. More films have trailers available prior to Sundance than ever before. Some wise filmmakers even come to their festival premieres armed with DVDs to sell. Will this be happening at Sundance? Are there any filmmakers reading this who plan to? Let us know.

37. Cultural institutions are stepping into to fill the void left by mainstream media’s abandonment of the art film space. MOMA in NYC now schedules films for regular runs. If we want to see art, why not go to a museum? We need shrines to see beautiful projection and I hope there are many other institutions picking us MOMA’s lead. It could become an actual circuit.

38. The fight to restore integrity of the producer credit continues. The PGA continues to lead the charge here and looks poised to step it up. The recognition of the need to a specific financier credit is becoming part of the conversation – namely that the Executive Producer credit should not be used for line producers but preserved for those who help finance. There is so little dignity left in the role of producer, one hopes that the rest of the industry recognizes how they are all vested in restoring integrity to the credit. Granted there are times when more than three individuals truly are producers on a project, but twelve? Wouldn’t it be a great world if even the distributors committed to stopping over-inflated credits? If an organization like the PGA actually went after the individuals and companies who push for such false credits? Real producers are always in a vulnerable position when looking for cast and financing and a soft position will not get this done. Why does a distributor or sales agent seek such credits anyway?